Microsoft Plumbs New Markets

Microsoft was founded with the idea of putting a PC in every home in
America.

Having achieved close to 75 percent penetration here and in other developed
economies, Microsoft has now turned its eyes to other, less affluent
regions.

The company has launched a pair of initiatives in recent years that aim to
develop a customer base in developing nations, with varying degrees of
success.

Microsoft recently celebrated the millionth sale of Windows Starter Edition
(WSE), a very stripped-down version of Windows at an equally reduced price.

Different versions of WSE have been produced for each region in which
Microsoft sells the product, which certainly helps account for its success.

The other initiative for emerging markets, introduced in the spring, is FlexGo, a pay-as-you-go solution patterned on the prepaid
phone card model.

Microsoft says uptake of this program is strong, but is not forthcoming with
any figures, which leads one to suspect the results aren't as good as
expected.

But regardless of the success of either program, Microsoft is also learning
a great deal about markets that may be worth a lot more in the coming years.

And it is even getting immediate dividends in the form of design feedback
that it can use today in more developed markets.

The Redmond, Wash.-based software vendor launched Microsoft Windows Starter
Edition three years ago, with the idea of offering consumers in developing
countries less expensive versions of its products that were also tailored to
their particular needs.

The goal was to extend the "a PC in every home" premise to a global scale.

"We needed a new product to make that dream more of a reality in other
places around the world," noted Mike Wickstrand, senior director of market
expansion for Microsoft.

Microsoft did careful market research and worked closely with governments in
order to tailor WSE to specific regions and ensure that it was accepted by
its intended audience.

Well beyond simply translating commands into local languages, Microsoft
included support for scripts such as Portuguese, or using icons in training
videos that resonate with specific cultures.

A training video for the Vietnamese market, for instance, shows Trang Bin, a
familiar cartoon character.

Wickstrand noted that Microsoft worked closely with the government of Thailand before rolling out a Thai version in November 2004.

Not that Microsoft is giving Windows away in these markets.

"The stuff is not free," noted Roger Kay, founder and president of
technology consulting firm Endpoint Technologies.

"They're trying to make this into a real business."

Indeed, Microsoft hopes that as the economies in these nations grow, it will
become a favorite go-to brand for all things PC.

However, WSE is also an opportunity for Microsoft to show governments in
developing nations its, well, softer side.

One reason for this solicitude is that Microsoft doesn't want to lose those
nations to vendors of competing platforms.

"They're trying to fend off the open source movement to some degree," noted
Kay.

In the meantime, Microsoft launched FlexGo, another initiative aimed at
citizens of developing economies.

The initiative was launched after an extensive trail in Brazil, and is being
deployed in Russia and India as well, but it has yet to demonstrate similar
traction.

Wickstrand said that "adoption is in line with our expectations," but
refused to discuss specific numbers.

Perhaps that's because not all developing countries are created equal.

"It has to be in a market where people are used to buying on time," said
Kay. "It could work in Brazil, but I'm not sure it's going to work in a lot
of other markets."

Both programs, however, have given Microsoft significant insights into new
markets.

Wickstrand said Microsoft paid careful attention to local feedback in
designing localized versions of the Starter Edition, from character sets to
specific functions.

Wickstrand said his team takes great pride in having "tapped a new segment
of the world's population to help us design our future products."

For instance, it will incorporate certain aspects of help videos into
domestic versions of Vista that were developed for WSE.

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